Gold and silver daily review (August 07, 2014)

Spot gold prices rose by around 1.4 percent on Wednesday triggered by safe haven buying on worries that escalation of the military conflict in Ukraine and weak tone in global equities acted as a positive factor.

Safe haven bids rose after NATO said Russia had massed about 20,000 combat-ready troops on Ukraine's border and could use the pretext of a humanitarian mission to invade, its starkest warning yet that Moscow could soon mount a ground assault against its neighbor. In addition, Russian President Vladimir Putin announced Moscow's biggest economic response to Western sanctions, ordering his government to restrict imports of food from countries that have imposed sanctions on Russia.

Prices were also supported as Italy, the euro zone's No. 3 economy, slid into recession in the second quarter, for the third time since 2008.

On the MCX, gold prices gained by more than 2.8 percent taking cues from strong international markets and rupee weakness.

Silver

Spot silver prices rose by around 1.6 percent on Wednesday in tandem with gain in gold prices. Increased speculative interest due to escalation of geo-political tensions between Russia and Ukraine acted as a positive factor for prices. In addition, weakness in the dollar index coupled with strength in Nickel prices boosted silver prices too.

On the MCX, silver prices rose by around 1.2 percent taking cues from strong international markets and rupee weakness.

Outlook

On an intraday basis, we expect gold and silver prices to trade higher as the escalation of geo-political tensions between Russia and Ukraine is boosting the demand for safe haven raising the speculative interest. Although, recent economic indicators from the US is showing signs of growth the near term movements in gold prices will be driven by the developments on the geo-political issues.

Meanwhile, unemployment claims to be released from the US in the evening session will decide the trajectory of gold prices further.

On the MCX, gold and silver prices are expected to trade on a positive note taking cues from strong international markets.